In Very “Hawkish Hold,” Fed Keeps Rates at 5.50% Top of Range, Sees One More Hike in 2023, Only Two Rate Cuts in 2024, to 5.25%. QT Continues

The shocker was the infamous “dot plot”: Higher for even longer, ending the year 2024 at 5.25%.

By Wolf Richter for WOLF STREET.

The FOMC kept its five policy rates unchanged today, with the top of its policy rates at 5.50%, after the rate hike at its prior meeting in July. Various Fed governors have had broadly telegraphed this move in recent weeks. The Fed has hiked by 525 basis points so far in this cycle. The vote was unanimous.

The shocker coming out of today’s Fed meeting was the infamous “dot plot,” where individual members of the Fed’s FOMC project the trajectory of monetary policy in the future: As before, they saw one more rate hike in 2023, to 5.75% top of range, but they slashed their rate-cut projections for 2024 by half, from four rate cuts, to just two rate cuts, ending the year 2024 at 5.25%. Higher for longer.

The shocker at last year’s December meeting was that they took rate cuts off the table for 2023. And they stuck to it, and financial markets spent the first eight months of 2023 twisting Powell’s words into man-buns to come up with “Powell was dovish,” and fighting the Fed all the way, and refusing to accept the no-rate-cut scenario in 2023.

With only three months and two FOMC meetings left, markets have finally thrown in the towel on rate-cut predictions for 2023. But now they’ve got a new passion; they’re gearing up to fight the Fed in 2024.

Today, the Fed kept its policy rates at:

  • Federal funds rate target range between 5.25% and 5.5%.
  • Interest it pays the banks on reserves: 5.4%.
  • Interest it pays on overnight Reverse Repos (RRPs): 5.3%.
  • Interest it charges on overnight Repos: 5.5%.
  • Primary credit rate: 5.5% (what banks pay to borrow at the “Discount Window”).

Higher for longer.

A series of rate hikes are generally followed by plateaus before rate cuts begin. The Fed signaled that the plateau has not been reached yet, and that there may be another hike or two. And it indicated in the dot plot that when the plateau finally starts, it will be longer than previously indicated:

Statement leaves the door open for additional rate hikes. The statement repeated the language of the prior statements, which leaves the door open for more rate hikes:

In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”

QT continues, with the Treasury roll-off capped at $60 billion per month, and the MBS roll-off capped at $35 billion a month.

The “dot plot.” 

One more hike in 2023. In its updated “Summary of Economic Projections” (SEP) today, which includes the “dot plot,” the median projection for the federal funds rate at the end of 2023 was 5.625%, or 5.75% top of range: One more rate hike in 2023. Of the 19 participants, 12 indicated exactly one more hike; 7 indicated no hike.

Two rate cuts in 2024, instead of four rate cuts projected at the June meeting. This would bring the 5.75% at the end of 2023 to 5.25% by the end of 2024, top of range.

Of the 19 participants, 10 participants indicated two or fewer rate cuts in 2024 (1 saw two rate hikes). And 9 participants indicated three or more cuts.

These are the projected mid-points of the target range by the end of 2024, after the 2023 hike to to 5.625%:

  • 1 expects: 6.125% (two hikes in 2024)
  • 1 expects: 5.625% (no cuts in 2024)
  • 4 expect: 5.375% (1 cut)
  • 4 expect: 5.125% (2 cuts) = median
  • 4 expect 4.875% (3 cuts)
  • 3 expect 4.625 (4 cuts)
  • 2 expect 4.375 (5 cuts)

Median projections also jacked up expectations for GDP growth for 2023 to 2.1%, from the projections of 1.0% in June.

Median projections for the “core PCE” price index dipped to 3.7% by the end of 2023, from 3.9% at the June meeting.

What banking crisis? Today’s statement repeats the same language about the banking crisis for the third meeting in a row: That the “tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation.” And it repeats that “the extent of these effects remains uncertain.”

And here is my (ok, not always 100% dead-serious) take on Powell’s press conference: “Carefully,” Dude: Powell at the Press Conference

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  205 comments for “In Very “Hawkish Hold,” Fed Keeps Rates at 5.50% Top of Range, Sees One More Hike in 2023, Only Two Rate Cuts in 2024, to 5.25%. QT Continues

  1. Debt-Free-Bubba says:

    Howdy Folks… Lone Wolf Lone Wolf. THANKS In other news.
    Wells Fargo is looking for analysts that predict, 225 pt drop by March 2024.

    • Leo says:

      Lol, Fed declines hike inspite of increasing inflation. Media busy in applying its spon to it.

      My take: Real rates will remain negative forever. My definition of Real rates = 30 yrar treasury yield – real cpi that includes housing an money printing.

      You all have my condolences. I know many of you would get screwed real bad as a result of what’s coming

      • Wolf Richter says:

        “Real rates will remain negative forever.”

        Real rates are positive already.

        • Realist says:

          “The shocker” was Powell saying that a soft landing is NOT the baseline…. Immediately after JPow made this statement the stock market started to tank…
          Then later some Bozo from Bloomberg tried to misquote him, by asking why Powell why a soft landing is not their intention.
          Powell tried to explain that a soft landing is their intention….
          That was when all the Goldilocks forever fools started to realize that Powell was NOT comfortable predicting a soft landing….

        • and he said they would remain so. There was a lot of talk about neutral rates? and JP called them “natural” rates. That whole thread was sort of bizarre.

        • TomS says:

          “1 saw two rate hikes”

          I like the way that sounds and would love to see the stock market try to fight that.

          The only real fix for housing is a moderate recession whereby unemployment rises above 5% for at least 12 months.

          That MAY get us to a much needed nationwide 30% dip in housing prices.

        • Wolf Richter says:

          A travel slowdown from these crazy levels will bring a flood of homes that have been on the vacation-rental market onto the seller’s market, just when the buyers have gone home.

        • Mark says:

          “Real rates are positive already.”

          Hahhahahah Good one, Wolf !

  2. Jackson Y says:

    Good lord the Wall Street analysts are pathetic. They keep asking the same question 100 different ways trying to get Powell to precommit to rate cuts. Answer: it’s data-dependent. He’s gotten better at deflecting these questions.

    • Debt-Free-Bubba says:

      Howdy Jackson I am of a mind that it is all scripted. Even the two party system thingy. They are really smart or stupid actors for US…..

      • William Leake says:

        You don’t really think the very wealthy are going to let some government lackies like the FOMC do anything to affect their net worth. The very wealthy will easily ride out this high short term rate storm. Even Buffet said he was trying to decide whether to buy 3 month or 6 month T-bills. I decided to go with 6 month mainly because it is less paperwork for me and it is paying the highest rate, but not by much.

        • Debt-Free-Bubba says:

          Howdy William YEP, I read that screen play also…… Some many are fooled by so few. HEE HEE

        • Dave in Chico says:

          1 year T-bills give you the most bang for your buck, given they are also sold at a discount.

        • MM says:

          3 and 6-month bills are also sold at a discount to par. I believe everything 1 year and under in duration is zero coupon.

      • Mark says:

        “Even the two party system thingy.”

        It’s one party. A Uni-Party of Millionaires. The War Party Of The Rich.

        • JimL says:

          Really? You aren’t capable of seeing the differences between the two major parties in the U.S.?

          You must walk into a lot of walls being that blind.

    • gametv says:

      these reporters are not allowed to ask the two real questions that need to be asked:

      1) do you now believe that monetary policy was the main cause of inflation that resulted from unprecedented money creation through purchases of bonds


      2) why are you cutting rates at such a pathetically slow pace?

      and bonus question

      3) the past decades have resulted in the greatest gap in wealth distribution ever seen in this country, to what extent do the activities of the Federal Reserve contribute to this wealth gap? and as a follow up question, most market participants believe that without intervention of the Federal Reserve asset prices would be much lower, isnt that primarily distorting the wealth gap in favor of the rich?

      or in one question

      Preferred question: Who pays you to screw over the American people in favor of the ultra-rich (top .1%)?

      • Captive says:

        1 and 3 hit the nail on the head for me. Frankly I don’t see the value of a media that can’t ask those questions.

      • Jon says:

        Reporters who dare to ask these questions would be booted out for ever.
        All these journalists are well vetted.

      • Gattopardo says:

        “these reporters are not allowed to ask the two real questions”

        Where do you get this crap? Of course they can ask it.

      • MussSyke says:

        It’s more like the top 40%. Most people with any money understand they need to invest. I don’t disagree with your sentiment, but I’m just sayin’…it’s that whole thing where people think anyone with a few bucks more is rich.

      • Mark says:

        “Preferred question: Who pays you to screw over the American people in favor of the ultra-rich (top .1%)?”

        And that, my friends, is exactly the issue. Well said.

    • Cold in the Midwest says:

      They don’t mention another concern but you can bet it is there. That is the influence of a potential economic slowdown/recession in an election year. Sometimes the voters will take out poor economic conditions on the incumbent(s). That is why some in the media are SO eager to hear a rate cut commitment and timeline from Powell.

    • Fed up says:

      It’s absolutely disgusting.

    • MussSyke says:

      Dude…did you ever think they might cut rates soon? All it takes is some populist asshole getting (back) into power, protecting his own wealth. Hedge your bets, and hold some stocks. Bad for the country, yes, but it still might happen.

    • RH says:

      We really must send two thank you notes for the increasing real estate and stock prices: one each to the two most dangerous presitators. But for their actions and threats, for yeare, which made foreign investors flee to invest in the safer USA, we would not be doing as well. LOL (I have slowly become their supporter in the sense that they are the leaders I have always wished on our enemies. LOL)

  3. Earl says:

    As the rates stay high, it bankrupts Treasury as it pays these rates on an ever growing debt..or so I understand,.. political nonsense meets reality

    • SoCalBeachDude says:

      Interest rates (yields) are SET BY US TREASURIES and not the other way around by anything the Federal Reserve does.

      • DM says:

        They are set by the market on the long end the Fed does control the short end.

        • SoCalBeachDude says:

          Nope. They’re set by the markets on ALL durations.

        • eg says:

          SoCalBeachDude, that will come as something of a surprise to the men and women on the Fed who get together and literally vote on the overnight rate.

          Where do such delusions come from?

        • Ltlftc says:

          Eg, there is a confusion that the reserve sets treasury rates directly and not influence them indirectly. Hard to tell whether people understand this sometimes. Technically, socal is correct.

    • Bruce says:

      You can’t keep printing money , giving it away and expect inflation to go down. Based on the inflation of 1980’s fed rates were around 20% it took rates of if I remember right banks were paying 24% before inflation finally broke. If inflation is running at 10% it will take a rate much higher to slow the economy down. As long as the fed rate of 5.25 is below the inflation rate of government says 3.67%. You tell me what it is the current
      US inflation rate. My thoughts are were being lied to again on what is the current inflation rate. The economy isn’t slowing down yet so I look for FED rates to go up. Just my option. Don’t believe any of this as I have been wrong before. More than once. Think about it, read about it and come to your own option.

    • Gattopardo says:

      LOL, “high rates”…. Borrowing 10 years at 4.25% is still DIRT CHEAP.

  4. Jackson Y says:

    IMHO the Federal Reserve has done a surprisingly decent job since realizing their mistake in 2021 and doing a complete U-turn.

    For this reason it somewhat baffles me why so much anger is directed at the Federal Reserve, instead of more towards the government & fiscal policy.

    Not only has the government NOT changed course, spending levels under the bipartisan debt ceiling agreement are higher than ever for 2023 & 24, just not as high as they would have been under one-party control. In fact, all the government spending – from money spigots still flowing from ARPA, IIJA, IRA, etc. – is working to blunt the effects of Federal Reserve tightening. Numerous politicians are still campaigning on expanding welfare benefits, tax cuts, and other forms of stimulative fiscal spending – and no one seems to be electorally punished for it.

    What’s the reason for this disconnect?

    • Debt-Free-Bubba says:

      Howdy Jackson Again…. The word bipartisan does not exist in Govern ment.

    • Doolittle says:

      Corruption is the root problem.

      • NBay says:

        Sheer analytical genius….

        We still have at least one polymath, complicated as this world is now.

        It’s to Wolf’s credit that you chose his site.

    • Prince says:


      It seems covid spending opened the Pandora box :
      Governing body goes on spending sprees to please electors and both love that.

      My guess is that they will get angry at the FED before we are finished with inflation knowing FED can reopen the box.

      • Debt-Free-Bubba says:

        Howdy Prince Reagan fooled me. Great quips about limited Govern ment and individual freedom with tons of deficit spending. He brought Russia to its knees, sorry, Russia still does what it wants too…

        • SpencerG says:

          Oh puhleeze!!! When Ronald Reagan and the first George Bush turned the nation over to the Baby Boomer Presidents they had neutered the greatest totalitarian threat menacing the globe since Nazi Germany AND left a “Peace Dividend” in their wake. The total bill for achieving that victory was $4.1 trilliion in total National Debt.

          The total national debt is now $33 trilllion… over 800% higher… and that was with minuscule inflation up until now… Reagan and Volcker defeated THAT too.

          If you want to blame someone… look in a mirror. It was the generations that came after the WWII generation who let these politicians spend and spend and spend… with NOTHING real to show for it. That is on us.

        • NBay says:

          I’ll give you credit for still flailing away trying to defend the most damaging president in modern times……although the jury is out (pun intended) on Trump having a second shot at it.

          Do you fondly stroke the 707 in Simi Valley from time to time? You undoubtably have the money to make the pilgrimage at least a couple times a year, even if you are East Coast.
          (probably live in Simi with the Kardashions and other well known knowledgable commenters.)

        • NBay says:

          Allow me to rub it in please, since you keep insisting Reagan did so MUCH GOD for this country….I’m NOT (Wolf) attacking YOU, just Reagan and his famous bumper sticker line…..I am sure you know the one of which I speak……let’s say I am educating you;

          Hochul issued a state of emergency across New York City, Long Island and the Hudson Valley due to the rainfall and deployed members of the National Guard around the state.

          “People really need to be taking this extremely seriously,” she said in a news briefing today. “THE STATE IS THERE TO HELP, and we’ll get through this together, as we always do.” (Caps, comma mine)

          From the Gov of New York… case you didn’t know it people are really suffering there NOW, and it’s going to get worse tonite.

      • says:

        > It seems covid spending opened the Pandora box

        Don’t forget we wasted $7,000-billion on the War on Terror.

    • gametv says:

      Jackson – Two answers 1) They could clearly see inflation developing and still kept pouring more assets onto the balance sheet and 2) the pace of reduction in the balance sheet is pathetic. They bought something like 2 trillion of assets in a month or two, so why the pathetically slow pace of cutting? excess money in the system is the sole reason for inflation continuing to hit the lower and middle class. This props up asset prices but destroys the real (non-financial) economy.

      I would also argue that it would be far smarter for the Federal Reserve to have actually aimed to cause a recession quickly to stop inflation dead in its tracks at an early stage. We have a very real problem with higher long term interest rates getting baked into the cost of financing this massively growing federal debt, thereby leading to higher interest payments.

      A very smart financial guru would have advised the following:
      – Start to tighten conditions by selling off as much of the balance sheet as possible BEFORE they raised short term rates. this would have allowed them to not only roll off debt, but outright sell the stuff they acquired with minimal losses.

      – Sell off the whole MBS balance sheet while interest rates were still low to avoid losses and get rid of it

      – By executing a sell-off of the balance sheet they would have hit asset prices quickly and taken out the air, which would prevent future losses.

      – Selling off the balance sheet quickly would have raise long term interest rates, so the yield curve would not invert as much.

      Increasing long term interest rates is a far better way to stop asset bubbles (because it changes the valuation equation (discounted cash flow) on nearly every investment much more than short term rates).

      Our inflation is primarily a monetary phenomenon, caused by the Fed and the US government spending.

      The primary reason they are not doing this is the following:
      – The Fed wants to pump up asset prices for the rich
      – The Fed is protecting the banking system at the expense of the American people
      – Inflation is good for large corporations
      – The Fed does not care if it causes small businesses and individuals to go broke. Small business failures will protect the rich, while causing enough pain amongst the lower and middle classes to reduce service and goods inflation. But once again, the goal is to reduce demand from the lower 90% of the population, while preserving the wealth of the rich.

      • Captive says:

        Sorry if this is a tangent.

        “The Fed is protecting the banking system at the expense of the American people”

        Isn’t protecting the banks also protecting Americans? Like if they let banks fail, or don’t rush in to ensure deposits as they did, don’t Americans lose faith in banks and cause an economic collapse that hurts everyone? Have I mistakenly absorbed propaganda with this line of thinking or has protecting banks become necessary to protect the people?

        Btw this is an honest question, not a passive aggressive masked statement lol.

        • MussSyke says:

          I agree.

        • SS says:

          Isn’t protecting the banks also protecting Americans?

          In my opinion: no.

          Protecting the banks means protecting the shareholders, i.e. owners, of those banks. You give money to “the banks” and you are essentially enriching the owners of such enterprises.

          If you actually want to protect the people, you could let banks fail, i.e. go bankrupt, and still ensure their deposits by giving that money DIRECTLY to the depositors. The exact transfer mechanism would have to be fine tuned, but it is far from complex.

          Not only you will stop enriching fat cats, but that will bring back that healthy old American tradition, now lost, of letting business fail as a consequence of their poor choices. An American hallmark, I would say. It differentiate American companies as an extremely competitive and efficient among rest of the world. America was the antonomasia for free markets.

          Nowadays, America is becoming as socialized as Europe, probably is already there save some specific details, e.g. gun ownership. And certainly American banks are as competitive as the ones in Argentina and Venezuela, the difference being the size of the economy where they operate in.

        • Wolf Richter says:


          “If you actually want to protect the people, you could let banks fail, i.e. go bankrupt, and still ensure their deposits by giving that money DIRECTLY to the depositors.”

          That’s exactly what the FDIC and Fed did with the bank failures earlier this year. They wiped out investors and made depositors whole. And the banks that bought the assets got a great deal, it seems.

      • ChS says:

        gametv: your suggestions on how the Fed could have implemented a better strategy are good, but how would that have helped the “american people” without benefiting the “rich”? Short of a communist revolution, or some other massive structural change to the US economy, how do you do anything to help the common man without benefiting the “rich”.

        Wealth disparity exists in all systems. You may be able to reduce income disparity somewhat, but not without increasing inefficiency in the economy and creating barriers to economic mobility. There will always be ultra wealthy, people living in poverty, and people in between. I would love to hear some real ideas on how to reduce the number of people in poverty and increase those in the middle. It mush less important how many “rich” people there are…I’d say the more the merrier.

        • MussSyke says:

          We could do like India, and stop counting the useless.

        • Ltlftc says:

          Reduce the labor force by closing the border.

          Focus on STEM in education. Provide only STEM/Medical education loans/grants, and finance technical/community college construction and startup.

          Reduce foreign aid.

          Ban single family real estate ownership by foreigners, corporations, proprietorships, and other businesses, or heavily tax such ownership annually.

          Ban all real estate ownership by foreign entities, including dual citizens, or heavily tax such ownership annually.

          Bring back sound money. (Silver/gold coinage)

        • make currency devaluation illegal says:

          How to help common people and poor? Very simple. Quit debasing the currency, meaning printing more than the goods and service produced by the economy. Since they’re currently not, don’t ever do it again. Help them even more? Roll back the debasement that occurred, at a minimum, get the money supply back to pre covid. It should be set in stone and should be illegal to devalue the dollar, but the people in charge lack wisdom and common sense, thinking they won’t be held to account for stealing.

      • n0b0dy says:


        perhaps you forgot, but inflation was ‘transitory’..

        so there was no need to implement any of the suggestions from the ‘very smart financial guru’.

    • George says:


      Remember: the Fed only giveth to the wealthy, whereas the government giveth to EVERYONE.

      • Gattopardo says:

        “Remember: the Fed only giveth to the wealthy”

        Nonsense, every property owner, wealthy or not, got a giant reduction in their financing costs and a boost in values. Seriously, where do you people get this stuff???

    • DownFed says:

      There was no “mistake” in 2021. On the fiscal side, they were running a deficit around $2.7 trillion, including a $1.9 trillion stimulus. I think that there was a zero percent chance that they would have gone ahead with that stimulus absent a Federal Reserve buy-in to monetize the debt in order to prevent interest rates from exploding.

      So, the Fed had two choices: 1. Say that they can’t do anything about the inflation because they are committed to monetizing the deficits that were financing it (fiscal dominance) or …
      2. Maintain that the inflation was “transitory”.

      Larry Summers wrote an article that they all read on the consequences of the stimulus that they all read, so no one at the Fed thought that inflation was transitory. But, they had to say so, because a Fed guided by fiscal dominance policies wouldn’t maintain that “independent” agency thing that they like to project.

    • Felix_47 says:

      Most Americans do not pay more than minimal income tax. Raise tax rates and they will scream bloody murder. No politican lost their job by lowering tax rates. In what planet is 400,000 per year middle class and deserving of no tax increase to fund Ukraine or a myriad of other outrageous expenses? Taxing is like the draft. Abolish it and the people let the government do whatever is needed to serve their interests.

    • sufferinsucatash says:

      Cuz just like with school vouchers the crazies want to get their hands on that sweet wad of public money.

      They want to go swim to Uncle Sam scrooge mcduck’s vaults of cash. Then be the “Fed”. And their fed would be just steal as much as you can.

      So in short, they want the cash and can’t take it if the fed is controlling it.

    • Pea Sea says:

      “it somewhat baffles me why so much anger is directed at the Federal Reserve, instead of more towards the government & fiscal policy”

      It baffles me, more than somewhat, that there isn’t far, far more anger at the Federal Reserve outside of the comments sections of a few blogs like this one. Their inexcusably reckless and relentless money printing and rate repression made all that “government and fiscal policy” possible–and it came on top of years of previous reckless printing and repression that had already blown up some good sized asset bubbles.

    • Happy1 says:

      The Fed keeping interest rates artificially low since 2008 aided and abetted the out of control federal deficit spending by allowing for lower cost of borrowing. If we had normal rates without Fed interference, bond buyers would have put an end to this endless deficit spending nonsense a decade ago. But the reckoning is now very close.

  5. Phoenix_Ikki says:

    How about forecast no rate cuts at all and be data dependent like they always said before? Going from 4 to 2 rate cuts is like telling junkies, here are two lines of coke for you vs 4 as you’re hoping for….what a joke…

    • LIFO says:

      Perhaps the Fed will cut rates twice at 50 basis points each instead of cutting four times at 25 basis points each. I think the Fed will have more credibility if it quits talking about the dot plot in public.

      • Wolf Richter says:

        For 18 months, people have said that the Fed will cut rates at the next meeting or whatever. And it continues. The wishful thinking of the people knows no bounds.

        • Phoneix_Ikki says:

          Well, what do you expect when the FED still dangle that carrot in front of them in their dot plot. Telegraphing 4 to 2 cut is still a cut and in the age of market FOMO junkies, they will run away with any hint of rate cut hopes and make up the rest with fantasy…

          Hence my point of if you want to get to 2% inflation as soon as possible, don’t telegraph rate cuts in 2024…Pow Pow is comfortable saying not thinking about thinking of rate cut back in the days..

        • Wolf Richter says:

          Inflation doesn’t go away overnight, no matter what the Fed does. This is a slow uncertain process that takes many years, which is why inflation is so insidious.

          I understand that there are folks out there that want the Fed to tear everything down TODAY and cause a huge financial and economic mess that would be very entertaining to watch from the sidelines? But that’s not the way to do it. There are real-world consequences for creating a mess like that, like the lights going out at your house. So now, rates are at 5.5%. They’ll go higher and they’ll stay higher, and the economy will keep growing, and inflation will do its thing, and if it doesn’t come down eventually, rates will go higher and stay higher, and the economy will keep growing, etc.

          The 10-year yield spiked to 4.41% afterhours. Not sure what happened afterhours. Maybe some people read this article.

        • DownFed says:

          I see a problem coming at some point, and that is when the interest on the national debt becomes onerous to service.

          That’s the situation Japan is in now. According to Deloitte, the BoJ is buying all the Japanese deficit. And I’m hearing that their citizens are buying gold or overseas bonds.

          The only way I see out of this is to raise taxes, or curtail spending. Powell has testified that the deficits are unsustainable.

        • Gabriel says:

          Historically, isn’t that when the stock market makes a significant correction? When the Fed cuts the rate?

        • Wolf Richter says:


          You really need to look at pre-1985. Nothing that has happened since then compares to the inflation bout we have now, and so what happened over the past 40 years is not the right model. You need to look pre-1985. And even that doesn’t apply because now we had many years of QE, and there is all this extra liquidity floating around, and asset prices have been ridiculously inflated, which wasn’t the case the early 1980s.

          Generally, the Fed cuts rates when inflation and the economy are slowing significantly. By that time, corporate credit gets in trouble, etc. so employment gets in trouble, and eventually consumers get in trouble as more of them lost their jobs. That’s kind of the process.

          But this time, asset prices are so ridiculously inflated amid all this excess liquidity after years of QE, and now there is global QT, and higher rates, and asset prices are coming down without a recession.

        • Escierto says:

          I laughed when I read DownFed’s comment that the Japanese are buying gold. No one is buying gold anymore. It’s yesterday’s rock.

        • Nyguy says:

          Gold at all time high in yen, 10k per gram. Makes you look pretty stupid.

        • Wolf Richter says:


          In yen? That currency has crashed by about 30% against the USD in three years thanks to the disastrous BOJ.

          Why not gold in Argentine pesos?

        • Escierto says:

          An all time high in yen only means that the yen is very weak in relation to the mighty USD. The price of gold in USD is the only price that matters and no, no one wants gold anymore.

        • SpencerG says:

          Escierto… NO ONE wants gold???

          I WANT GOLD!!! As much of it as I can get. Like land they aren’t making any more of it which means it is a natural hedge against inflation. Which MIGHT explain why the Japanese are turning to it.

        • Escierto says:

          SpencerG, if gold is such a great hedge against inflation, why hasn’t it increased in the past couple of years? It hasn’t done anything against the USD. It was a little over $1900 five years ago and that’s where it still is today. It’s a lousy hedge against inflation.

        • Mark says:

          “I understand that there are folks out there that want the Fed to tear everything down TODAY and cause a huge financial and economic mess that would be very entertaining to watch from the sidelines? But that’s not the way to do it.”

          Volcker had to do it that way. 20% Fed Funds Rate. 1982.

        • Wolf Richter says:

          Inflation was about 3x or 4x the rate of today, and it was spiking.

        • I’m replying to the comments about gold as a hedge against inflation. Gold has gained 650% in the 22 years since 2001 (dotcom crash, and the place where Gordon Brown sold out). Gold isn’t done yet.

        • SpencerG says:


          You need to learn how to read a graph my friend. Five years ago (September 2018) gold was priced at $1281.30

        • NBay says:

          I doubt there will be many “sidelines” safe enough to watch from….Even N Zealand.
          When we suddenly have a LOT of our population with nothing left to lose, YOUR “sidelines” will be about as safe as Custer’s were.

          We will likely even have to risk more climate change (VERY SCARY!!!….but we did wait 60-70 years to try to change things to SUSTAINABLE) to unwind this mess without losing all civility. Still may not make it.

          Side note; Considering all the problems; transport, lines, empty shelves and the general struggle for many to just exist…….most people still make an effort to get along……..I wouldn’t mess with when that ends.

      • sufferinsucatash says:

        Inflation would come back.

        I still do not think these rates are high enough to “simma’ it Don” But so far nothing has broken…

  6. Ev Last says:

    “Dot Plots” are just wild guesses about the future taken by people looking at data from the past. Big changes in Dot Plots mean the previous wild guesses were wrong, wrong, wrong.
    Debt must be inflated away, because the alternative is scary; so there is no alternative. Rates will stay as high as possible for as long as possible, not so inflation can return to 2%, but so it won’t accelerate while they are decreasing the excess money supply. This is going to take a long time.

    • gametv says:

      these are the same people that said that inflation was transitory.

      do you hand the keys to your new car to the same guy who just crashed your old car? really?

      audit the Fed/ reign in the Fed

      • SoCalBeachDude says:

        The Federal Reserve is annually audited by a Big Four top accounting firm and those reports running more than 500 pages each year are fully published on the Federal Reserve website at in great detail fall to see. Whenever the Federal Reserve has any profit (which they do not have now) they pay out 94% of those profits each year to the US Treasury for the benefit of its taxpayers.

      • VintageVNvet says:

        Howzaboot WE ”rein in the reign” of the FRB, and let ”the markets” determine all these metrics without any MORE GUVMINT FUBARs.
        End the FED.

  7. N. Wilder says:

    Powell was grumpy today at the Q&A. You can tell he is getting tired of answering the same stupid questions from the pivot-whiners.

    • Wolf Richter says:

      I still have no idea why the Fed has not implemented my request to give Powell a Taser, and when a reporter asks a stupid question, he pulls it out from under his lectern, aims it, and ZAAAAPPPP. “Next question.”

      • George says:

        Ooh, I’d PAY to see that.

      • Phoenix_Ikki says:

        Because the man looks like he is afraid of his own shadow the way he count on him tasering reporters? One can just grab it from his weak little hands and tell “Get the F out of here…”

        • Seba says:

          “Because the man looks like he is afraid of his own shadow the way he talks..”

          They have enough money to hire a goon to do it for him though

      • BetterWay says:

        Just like that Cheers episode where Cliff Claven got zapped everytime he said something stupid.

        • Rosarito Dave says:

          hahahaha…Thank you for that. I immediately remembered that episode and saw those scenes in my head of Cliff twitching out… that cracked me up! I’m now going to have to watch that episode again…. :-)

      • Fed up says:

        That would be so beautiful. I’d pay to see that.

      • Bond Vigilante Wannabe says:

        I think you could take a big chunk out of the national debt with a pay per view of something like that.


      • sufferinsucatash says:

        Or swap out Powell for Merrick Garland and see who doesn’t notice.

        That would be a fun prank.

      • Perhaps Powell doesn’t want to get zapped for all the stupid things he’s said….

    • Z33 says:

      I wonder why he/they are even doing Q&A after releasing their statement. Wasn’t it only recently when Ben was the Fed chair did he start doing these? Prior to that it was uncommon. I wish they would just release their statement and leave it at that. Seems too many eyes focus on the Fed and every word the chair speaks during these Q&As and little to no value is added…

      I’m also hoping higher longer. I want more hikes although QT is like hikes and supposedly 200 bps worth per some CNBC talking head after the meeting. Although ATL Fed in 2022 paper estimated $2.2T in rolloff QT over 3 years is like 29 bps in normal economic times and 74 bps during crisis. Regardless it is like a rate hike anyway.

      • SpencerG says:

        I wish they would go back to the Volcker years and say nothing. Just smoke on a big cigar at the lectern and say absolutely nothing about what they were doing. Let the markets figure it out on their own. Instead of trying to predict what the Fed was going to do in the future the markets (and economics reporters) would be too busy trying to figure out what it was doing in the here-and-now.

      • sufferinsucatash says:

        I mean you would think an economy would suffer from rate hikes. But for some reason consumers just pre anticipate what the fed is going to do, shrug and go about their day of Costco gluttony.

        Like WTH people!

        I mean when will 2 + 2 = 4?

        Right now it’s: “let’s see I make 100k, it buys me 40% less than 2016. But hey everything is ok! Shrug”

        • 91B20 1stCav (AUS) says:

          sufferin’ – ‘…I mean, when will 2 + 2 = 4?…’.

          Became a regular habitue of Wolf’s most-excellent establishment thanks to his fearless criticism of the decline/disintegration of GAAP some years ago.

          Always worth leafing back to review…

          may we all find a better day.

  8. Gen Z says:

    Higher bank rates mean more interest income from T-bills, CDs and Canadian GICs.

    Contrary to the Canadian Premiers ordering the Bank of Canada to cut interest rates to zero to “won’t someone think of the small mom and pop rent seeking landlords and speculators?!”, if the Canadian interest rates are lower than the Fed it means more money will go towards American T-bills for a higher yield.

    The financial advisors state that the historical average return on the stonk market is 7%, so a 6% savings account, CD or GIC appear to compete with that.

  9. Doolittle says:

    6-7% real doesn’t compare to 6% nominal.

  10. spencer says:

    Real interest rates are likely to rise as inflation falls, and the fiscal deficits continue.

  11. hal says:

    Keep rates high for the lonely savers out there who have suffered for the past 12 years

  12. SoCalBeachDude says:

    Beyond Clueless!!! – MW: Traders’ interest-rate expectations for 2023 little changed despite Fed’s projections

  13. Debt-Free-Bubba says:

    Howdy folks. Love reading the comments here and would just like to add, trying to make sense of the insanity could drive one insane. Be careful.

    • Captive says:

      You’re late, Bubba. I needed that warning about a year and a half ago, lol.

      • Debt-Free-Bubba says:

        Howdy Captive You still have a sense of humor. Sometimes all it takes to be happy and free…..

    • Some Midwest Guy says:

      Insane, I was insane once. I was locked in a room with padding on the walls and this jacket I couldn’t get off and there was this nice lady who would come in and talk to me everyday and they brought me food, but there was drip drip drip noise that drove me insane.

      Insane, I was insane once. I was locked in a room with padding on the walls and this jacket I couldn’t get off and there was this nice lady who would come in and talk to me everyday and they brought me food, but there was drip drip drip noise that drove me insane…

  14. Mike R. says:

    As I’ve commented before, Fed will hold rates longer not as much to dampen inflation (although that is part of it), but primarily to hurt Russia by strengthening dollar. There is also the goal of forcing Congress and Biden to get serious on reining in deficits. Forget about pivots back anytime soon, maybe never.

  15. SoCalBeachDude says:

    MW: Federal Reserve seeks ‘convincing evidence’ before determining Fed rate-hike campaign has succeeded (which, of course, it has not)…

  16. MM says:

    Again with the idiotic questions from reporters.

    “Since inflation is coming down, blah blah blah blah…”

    I was somewhat disappointed that Jpow didn’t swat these statements away more, but I understand he didn’t want to spook markets with a sermon on entrenched services inflation.

  17. William Leake says:

    I like that Powell basically said that the FOMC is now flying by the seat of its pants. They don’t know the length of lag effects. They will just look at the data each meeting and then guess what to do. But generally he said higher (but maybe not much higher), but definitely for longer. Okay with me. 5.5% state tax free is okay with me.

    Harry Truman once said he would like to meet a one-armed economist, because his economic advisors always said on the one hand this, on the other hand that. If these economists were actually smart, they wouldn’t be working in their flunkie jobs (government, academia, Wall Street). They would be on their billion dollar yachts living the good life.

    • George says:

      The August admission that Powell/the Fed don’t know what r* is (if they ever did) frankly shocked me. I BELIEVE them, I’m just surprised to hear them say it.

      Maybe because it’s not a concept the lay person knows about…?

      Totally agree with the “flying by the seat of their pants” point, but shouldn’t they ALWAYS be data dependent? And if so, we should just do what Milton Friedman suggested and replace the Fed with a computer?

      • William Leake says:

        George, but most of the data are flawed from the get go and often subject to huge revisions (still flawed). I would welcome an intelligent person exposing the insanity of most of our “data”. Maybe some of the mystery behind economics and its many real-world contradictions would be revealed.

        The Fed should probably be replaced by nothing. But it is such an integral part of our economic system that it will always exist. So I just roll with it. However, I am under no illusion about who controls the FOMC, and Congress for that matter. The very wealthy are smart (I am not talking about inherited wealth). That’s why they are wealthy.

        • morally bankrupt says:

          Intelligence isn’t the same as wisdom. Rigging the game to steal is very foolish and unwise, and whoever does so will ultimately gain nothing from it, while those who live humbly and honestly will be richly rewarded, as anyone with common sense knows.

      • VintageVNvet says:

        YES to replace FED with computer George.
        Only problem is WHO is in charge of the GIGO computer/AI inputs???
        OK, a new generation of the kind of folks who were trained from birth by the king, etc., to serve,,,
        ‘cept this time, trained from birth to serve humanity, etc., etc
        OH, wait, according to some, that is what AI will do…

      • Seba says:

        “And if so, we should just do what Milton Friedman suggested and replace the Fed with a computer?”

        I’d be surprised if one day, probably a bit far in the future though, it doesn’t happen. I mean there’s a reason most economies in the world, especially successful ones, are market economies despite some of the problems. IMO you’d never be able to amass a room “smart enough” that would be able to allocate resources better than a market can, no matter how many yachts they own between them 😂. Having fled a country with my family which tried to do just that proves the point to me at least, and yes many of them had fancy toys like yachts and tons of cash and assets stashed offshore. This is why I roll my eyes when people say that economists are idiots, they are expected to be able to make impossible predictions, those really smart people in yachts wouldn’t be able to do it either, they run businesses and deal in the micro, they’d be just as ineffective at a central bank. However, computers and software, I imagine one day will be powerful enough to do it, though I personally would feel a bit uneasy about it.

        • dang says:

          The fallacy of the all or nothing capitalist, also referred to as a libertarian. The markets, even if rigged, are better than rigged markets.

          I argue that the foundation of the success of the so called market economies since WW2 is as much a result of the social aspects of the social capitalist democracies, enforcing the basic conditions required for the competitive market hypothesis to apply.

          What we have now, IMO, is the avaricious capitalist class harvesting the seeds that were sown and had grown into trees by clear cut technique.

          Masking their intentions in a cloak of other peoples commitments and sacrifice to and for the public good, which at one time was recognized as true wealth.

    • DougP says:

      Not true, Wolf is still hanging out with the serfs, and he is smarter and Richter than all of us!

    • sufferinsucatash says:

      Those are thieves you’re describing.

      They end up with the riches.

      People with morals end up with government jobs.

  18. Nick Kelly says:

    To sum up the above chart of policy rates from 2000 to now, one word: ‘erratic’.

    How about instead of endlessly spinning the rudder back and forth just set rates at 4.5% for 5 years. This would make for a lot less predictions, meetings, tea leaf reading etc. but would enable longer term planning and bring some calm to the economy. It might also force government to address deficits because they won’t be able to count on lower rates. One question is, would government tolerate this or will it take over the Fed?

    • George says:

      “One question is, would government tolerate this or will it take over the Fed?”

      Look, the Federal Reserve is the ONE punching bag Congress has! EVERYONE can pile onto the Fed, everyone, regardless of party affiliation, can hate them. That’s what “independent” means.

      Their independence is what keeps voters from blaming government for economic woes. So things would have to get REALLY bad imo before the executive branch made any serious effort to rein in the Fed.

  19. John Apostolatos says:

    My thoughts:

    – Mortgage rates will hit 8% or more soon.
    – Many company stocks have been held up through buyback programs, but the entire charade will collapse once earnings suffer and new corporate bonds have to be issued at much higher yields.
    – Cities are slowly banning Airbnbs and short-term rentals, which will drag housing down even further as more supply comes back on the market.

    In other news:
    Instacart’s 11% plunge on second day of trading wipes out almost all of its IPO gains

    • MM says:

      Agree with all of this. I think mortgages will go over 8% before the year is over.

    • sufferinsucatash says:

      I like these thoughts.

      I shall pop popcorn and smile a lot thru this cascading destruction.

  20. Winston says:

    With examples like UPS drivers making $170k in annual pay and benefits and the UAW wanting a 46% pay raise is wage push inflation going to become a significant factor fighting the Fed’s effort or is it already?

    • sufferinsucatash says:

      Tbh that 170k is kind of a red herring.

      Go ask your ups driver how much actually gets to his bank account each month. Then multiply by 12.

      It will be a lot less than 170 I guarantee you.

      Perhaps not even 80k.

      • Publius says:

        Agree, it is “up to $170k,” but look at the pay stub, not the bank account. Everyone has taxes deducted (and retirement, health insurance, union dues), so what goes in the bank is highly variable.

      • Winston says:

        Doesn’t look like one to me.

        “UPS drivers will earn an average of $170,000 in annual pay and benefits at the end of a five-year contract agreement… The deal, which was reached on July 25, will increase full-time workers’ compensation to $170,000 from roughly $145,000 over five years, according to UPS’ calculations… More than 70% of UPS’ 443,000 employees are represented by the Teamsters’ Union”

        • Winston says:

          JUST talked with my UPS delivery guy and he said the only thing that’s misleading about the $170k figure is that it’s the amount five years from now. He pays $15 per weekly paycheck in Teamster dues.

    • Naren says:

      A large part of what they’re fighting for is increased wages NOT at the cost of increased prices. The UAW know, same as everyone else, that the crooks that run the auto companies are assholes that have cut costs under the pretense of “the pandemic” via understaffing and overworking and have taken record profits without that translating to wage growth. In fact if you look at real wage growth over the past 50 years vs. company profits that’s been the case the whole time, but the pandemic was especially egregious.

      If the UAW gets what they actually are asking for we shouldn’t see prices increase on cars, just smaller paychecks for the parasite class. If they’ll actually get it is quite another story..

      • sufferinsucatash says:

        I like your analyzation here. Very prudent and that is exactly what is happening.

        Execs are the biggest crooks ever.

        Reminds me of Matt Damon in that car movie: “I go to sleep and my money makes money. I don’t even have to think about it, it’s just making more money.” Lol, what a smug bastard.

  21. Fed Up says:

    “financial markets spent the first eight months of 2023 twisting Powell’s words into man-buns ”

    Lolol. I needed a good laugh today.

  22. Gary says:

    “Hawkish Hold” sounds like: “Idiot Savant.”

    Cooling off Economy:
    How hard is it really to cool off the economy. Ninety years ago, four generations, the economy was cooled off in the space of three years, 1930 – 1933, a retest in 1937 showed the economy was still “cool.” Those 1930s people had an overheated period of excess bank loan liquidity, the stock market running from top to bottom like a “meme” stock craze etc. They solved it in part by improving the banking system so that it did not hand back “excess liquidity” to depositors immediately, unlike Silicon Valley Bank, nor make new loans; a problem reoccurring with this current event battle over lower bank capital problems.

    Tight labor market: Look at the reality based movie: “The Grapes of Wrath.” There was no problem with jobs that couldn’t find workers. These movie characters were old time USA citizens, there weren’t even any foreign born migrant laborers, and they were doing the job of picking fruit, a job Americans wouldn’t even do today, without even having minimum wage. Of course it doesn’t have to be so extreme of a slow down as long as this inflation problem is promptly addressed more effectively; that did not happen at the FOMC today.

    • Nick Kelly says:

      ‘the economy was cooled off in the space of three years, 1930 – 1933, a retest in 1937 showed the economy was still “cool.”

      Ya it cooled off alright. One sure way to lower high blood pressure is to kill the guy.

  23. jon says:

    Good to see the unwinding in the asset market slowly but surely.
    We don’t want any crash.

    The hope in next few years, real estate becomes affordable for working people.

    The direction, as shown by WR, is in the right direction.

  24. BetterWay says:

    This might sound unkind but I struggle to trust a lot of old and wealthy people to make decisions for every day Americans. Powell is 70 and estimated to be worth around 40 million +/-. They probably have a room with lots of hard liquor and a dartboard and have a good laugh.

    • kramartini says:

      I agree. The decision makers at the Fed should be randomly selected from the population of teenage fast food workers.

      • gametv says:

        funny! so our two choices are old rich 70 year olds and teenage fast food workers?

        sounds like a typical pool of people who are eligible for eliute government jobs

    • Escierto says:

      You are not unkind at all. The mystery to me is why the younger generations who are now the majority do not grab the steering wheel from the old geezers who have been driving us in the ditch. I am 69 but I would be in favor of eliminating voting rights for anyone over 65.

      • kramartini says:

        Old age and treachery will always beat youth and exuberance…

      • El Katz says:

        “The mystery to me is why the younger generations who are now the majority do not grab the steering wheel from the old geezers who have been driving us in the ditch.”

        When was the last time the electorate was able to field a group of candidates of their choice? Look at the 2020 election for an example. No matter who the vote is, they get to vote only for the chosen ones… Agents of change need not apply.

        • Escierto says:

          In this country, the politicians choose their voters through gerrymandering and voter suppression and not the other way around. There is no democracy in America but when was there ever?

      • Rosarito Dave says:

        So… in the world according to Escierto… what other rights would you be interested in taking away? Just curious… :-)

        • Escierto says:

          Everyone squeals when it’s their right that is being “taken away” but they don’t care when the rest of the Constitution is being eviserated as long as it’s not their ox being gored. Let’s face it – this country only serves old white men – let’s screw them over good for a change! (And I am an old white man who knows his privilege comes at the expense of everyone who is not an old white man!)

    • MM says:

      To Jpow’s credit, he did explicitly state that inflation hurts the working class the most.

      That said, I agree platitudes are different than actually living poor.

      • 91B20 1stCav (AUS) says:

        MM – I recall the old term: ‘…talk is cheap…’. (…a no-limit card we all seem to possess…).

        may we all find a better day.

  25. You need to pull up the charts on 95-2000. That was “The Longest Pause”. And by 2000, CPI was 2% and GDP was 4% and the market crashed. The Fed narrative then wasn’t inflation, it was the economy overheating. They took rates up 3% 2X to 6% in 94 then paused five years. Powell today started to move the narrative from inflation to the economy. There were also disruptions in the forex market. US equities were on a tear. The Fed could fix the yield curve by bringing lots of new supply but ultimately the money has to come from somewhere and that looks like stonks.

  26. Alex says:

    The Real Shocker. One or two weeks from now, the finance news will tell you that inflation has been tamed and that the Feds will be lowering interest rates next FOMC meet. They publish it every time.

    • DRM says:

      Read a Morningstar article this afternoon. Said, they probably won’t hike anymore. And rate cuts will come sooner than the Fed is implying.

      Fed Signals higher for longer, but we expect aggressive cuts in 2024.

      The article was out not long after Powell spoke to the press. Makes me think the article was all tee’d up and waiting to be published before they even heard the Fed’s decision.

      • Wolf Richter says:

        Vanguard said that the Fed will need to hike up to THREE more times and keep them there through 2024.

        Morningstar is a bond ratings agency and bond analysis outfit, and all their clients are getting crushed by rising interest rates (prices of long-term bonds decline). So it makes sense that they have been among the pivot mongers from day one.

        • William Leake says:

          I saw that Vanguard comment and was much surprised, and pleasantly so. It goes against almost all main stream media propaganda. Nice to see at least one huge player bucking the herd mentality.

  27. polistra says:


  28. Micheal Engel says:

    1) The shocker : The Dow might rise to 38k/40k, thereafter a lightweight correction in 2024.
    2) Gov shutdown and UAW layoffs will be met by AMZN hiring 200K, Target, FedEx…Xmas hiring started in Sept.
    3) JP grim face sent the markets down. SPX closed Aug 25/28 gap.
    There are 7TD until Sept 29. If the Dow closes > 34.712 Dec 2022 high,
    good things can happen, but not to bond traders.
    4) Chip shortages sent car mfg productivity down. UAW workers were
    idle for no fault of their own. Ford and GM treated them fairly. Ford
    produced breathing ventilators. Ford & GM assembly plants are so
    sophisticated even new immigrant can replace UAW workers. The
    Gilded Age is back.

  29. Charlie says:

    Interesting that a 10 year MYGA (an insurance company annuity CD) from EquiTrust Life Ins hit 6% this week. EquiTrust is majority owned by Magic Johnson.

  30. Kunal says:

    Anyone buying long term bonds for less than 10% is a fool. Those who try to justify buying are either greater fool or a government agent.
    With all money printing and debt explosion, USD will lose value at an unprecedented rate and all assets in USD will rise in the long run (10+ years) at 10+% guaranteed. Buying anything related to currency is like buying toilet paper. Well buying toilet paper is a much better investment than buying USD, literally.

    It’s amazing that people are still buying long term treasuries and bonds at 5% yield, it’s simply unbelievable. There are way too many fools out there apparently, including most on this forum.

    • Wolf Richter says:

      Agreed, long-term paper is no good at 4.4%. But it’s stocks that hare getting mauled.

    • Bobber says:

      They don’t buy the 10-year with expectations of holding it. It’s a short term trade. They expect the Fed will lose its spine again and reduce interest rates at the nearest sign of trouble.

      It’s a reasonable trade, given the way the Fed is slow-walking QT, holding on to MBS, etc. It’s obvious the Fed is deathly afraid of asset price drops. Based on the Fed’s actions in the past, you could say support of asset prices is the Fed’s overriding mandate.

  31. Micheal Engel says:

    1) Most consumers have money in the bank, but the poor and the lower middle class are struggling. JP : we are worried about them.
    2) In Aug 2008 consumers and companies had $6.8T in commercial
    banks. Today $17.3T, almost tripled in 13 years.
    3) In 2020 The Fed legally robbed bank accounts and sent the money to small businessmen, the lower middle class and Shingle mums. The money is gone.
    4) The transitory inflation leaped forwards from 0.1% to 9.1%. It’s
    down to 3.7%, after plunging straight to 3%. Food and energy are volatile. The Fed ignores their spikes, but if energy stays elevated the Fed might hike above 6%.

    • Wolf Richter says:

      “JP : we are worried about them.”

      That’s not what he said.

      But he said that they get hurt the most by inflation, and that’s one of the reasons the Fed has to crack down on inflation NOW.

      • working man says:

        How about they get hurt a lot more by layoffs during a recession being engineered by higher for longer in the name of bringing inflation down by a weeny per cent.

        • Naren says:

          You’re right but the Fed can’t do anything else about inflation. What Americans actually need to do is get a clue and start organizing. Unions work, and the inflation problems we’re seeing are both the result of inefficient government spending during the pandemic that favored the rich (PPP loans being like half fraud) and greedy executives that keep raising prices under the false pretense of input cost inflation despite said costs not actually increasing (or, indeed, decreasing).

          The fed has control over the demand spigot and the demand spigot alone. They simply can’t do anything about supply push inflation other than raise rates and hope it works.

          The real thing that makes me nervous is if said organizing happens and wages actually become more equitable and the fed sees median wages rise and panics and sends rates sky high and crashes the market.

  32. Dick says:

    @Wolf. How useful are these dot plots? Or is it just a bunch of random guessing by stupid people? Can you please answer this question: If the Feds mandate is 2% inflation, and inflation has been running more than this for some time (according to PCE double) … and we can see end of year inflationary pressures still (energy) continuing. With no reasonable slowdown yet detected in the economy. With labor market still tight. How in gods name would the Fed start cutting in 2024?

    • Wolf Richter says:

      They will take the remaining rate cuts for 2024 off the next few dot plots. Since the fall of 2021, every single dot plot was more hawkish than the prior ones, and the trend continues. Higher for longer.

  33. Wes says:

    Watched the Powell Press Conference and he reiterated that the 2% inflation goal is here to stay.

    Higher for longer

  34. JeffD says:

    I would love to see the 5.0%-5.25% range for four more years. Inflation won’t hit the 2% target again until 2026, if ever.

  35. JG says:

    “Hawkish Hold”?…LOL!!!!

  36. Swamp Creature says:

    Powell said that excluding food, fuel, rents, housing costs, insurance, inflation is under control and heading towards his 2% goal. OOOps maybe it will be 3% or 4% target rate this time around.

    No mention of excessive federal spending and 2.5 trillion budget deficits as far as the eye can see.

    No mention of the War of fossil fuels which is driving inflation through the roof for the average family.

    • MM says:

      I agree federal spending is excessive and needs to be reigned in – but I think its taboo or something for Fed officials to comment on fiscal policy.

      • Swamp Creature says:


        “but I think its taboo or something for Fed officials to comment on fiscal policy.”


        Greenspan and Volcker did it all the time. This clown Powell is useless. He’s a political dumpster file and won’t say what needs to be said.

        • Wolf Richter says:

          Volcker made a deal with Reagan to jack up rates into the sky and trigger a big recession that would knock the wind out of inflation. I don’t remember him discussing fiscal policy. Greenspan never said anything compressible. Yellen stuck to the scrip of calling the deficits “unsustainable,” and not commenting further. And Powell has done that too, calling them “unsustainable,” and stopped at that.

    • JimL says:

      “War on fossil fuels”


      Tell me you get your information from poor sources that don’t inform but take advantage of you without directly telling me you get your information from poor sources……

      This “war of fossil fuels” isn’t causing inflation in any way. Stop being taken advantage of. Use better sources of information.

  37. makruger says:

    Higher for longer as today’s yields on shorter to intermediate term treasuries increased and the long end of the curve decreased.

    The market apparently has a mind of it’s own (or perhaps some yield curve control). Not quite the reaction I would have expected.

    Some sunny day those longer term rates will eventually catch up with reality.

  38. Depth Charge says:

    There is absolutely no such thing as “hawkish hold.” That’s like saying Jeffrey Dahmer was a humanitarian. Total f***ing bullsh!t. Everybody knows it. The FED has shown their hand – they WANT the inflation. The FED is entrenching inflation.

    • Kevin says:

      I knew Depth Charge would be fuming at the phrase Hawkish Hold. Indeed, they are either scared of breaking the economy or the stock market. I sincerely hope it is not the latter. They should absolutely let the obscenely overvalued stock market crash. The average worker doesn’t care about the market; only the speculators and the rich does.

      • Depth Charge says:

        They are trying to make inflation stick. It is totally obvious. They want the inflated asset prices. They don’t want the young to be able to afford houses or anything. RAPACIOUS GREED. That’s all they cater to.

    • Wolf Richter says:

      “There is absolutely no such thing as “hawkish hold.””

      The markets disagree with you. The 10-year yield spiked to 4.43%. Stocks sank. Asia is red all over now.

      • Depth Charge says:

        As you always say yourself, one day means nothing in the stock market. The FED and .gov are still stimulating.

        • Swamp Creature says:

          “The FED and gov are still stimulating.”

          Yep, Real Inflation at 11.5% (per John Williams) and interest rates at 5.5%. That’s stimulative in my book.

  39. LouisDeLaSmart says:

    Let us see what inflation does, will there be need for further increase in 2024.

  40. Catxman says:

    The Fed’s vote was unanimous because people are sheep. Conformists in deed and spirit. The odd man out, who may have had second thoughts, looked around a room that was dead set on doing one thing and he reversed course on himself.

    • BuySome says:

      Perhaps a “hold out” member, but the Fed has no “odd man out” position available. That would require limiting it to an unmarried male with no children whose sole power is the ability to act upon a self-destruct process once the countdown has been initiated. They can stand by and either allow the act or neutralize it at the last moment, but they cannot reverse the direction. (That requires a new vote by the full membership.) The purpose of the odd-man-out is to have someone who can make a cold, unemotional decision about species survival without personal complications clouding their judgement. Females are prohibited from occupying that position as they are the mechanism of species survival at the micro-level and this might interfere with macro judgements. Fair or not, there it is. Whether the Fed is a body holding destructive powers and needs that odd-man-out member is another question. (Wolf could not hold that position no matter how clear his thinking is.)

  41. Michael says:

    Crazily enough, 2023 so far has been the “market is more powerful than the Fed” rather than the “don’t fight the Fed” reality of the past. I am utterly surprised.

  42. AK47 says:

    Wolf, we hear anecdotally about how much money printing/pandemic assistance since 2020 has impacted inflation, and that the reason monetary policy is failing to control inflation is just that there’s been a broad increase in money supply.

    How much truth is there to these claims? Or more media BS?

    • Wolf Richter says:

      This has been one huge gigantic inflationary package: QE, 0%, direct payments to consumers by the government including PPP loans, debts that don’t have to be paid back or where payments were halted, rents that didn’t need to be paid, gigantic government deficit spending, energy price shock… And then the inflationary mindset kicked in (willing to pay whatever). They’re all responsible for this inflation.

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